China vigorously develops tax-free industry to attract overseas consumption

Recently, it is predicted that China is supporting its tax-free industry and is expected to replace the "cross-border" demand with the implementation of the policy of attracting domestic overseas consumption and return. In a recent report released by Wuhan Trade Officer of Korea trade and investment promotion commune (KOTRA), it was pointed out that by vigorously developing the tax-free industry, China has promoted the "return" of overseas consumption to China. According to the report, with the overseas consumption of Chinese tourists and the resulting foreign exchange outflow, it has become an important issue for China to stimulate domestic demand by returning overseas consumption to China. According to the Research Report on China's luxury market released by Bain, a global business consulting firm, China's luxury consumption reached 770 billion yuan in 2018, a year-on-year increase of 20%, accounting for 33% of the global market, ranking first in the world for seven consecutive years, and it is expected that by 2025, the market share will reach 40%. Therefore, the Chinese government is taking a series of stimulus measures to promote the return of domestic consumption. The representative measures are to reduce the tariff of consumer goods, implement the off Island duty-free policy, add duty-free stores in China, restrict purchasing on behalf of others, and add duty-free stores in the city. Hainan, a famous holiday resort in China, is vigorously implementing the policy of tax-free off island. It has increased the purchase amount and times of duty-free shops four times, and expanded the variety of duty-free goods. To stimulate domestic consumption, the State Council opened duty-free entry stores in Guangzhou Baiyun, Shenzhen Bao'an and other airports in 2015.

And reached an agreement on increasing the amount of duty-free entry for Chinese people. This year, the airport will expand duty-free shops to the city. Many cities are pushing forward the construction of duty-free shops in the city. As the Chinese government reduces import tariffs, eases tax-free policies on outlying islands and increases new duty-free stores, the number of domestic consumers who buy famous brands in their own countries is also increasing, the report said. Take China's domestic retail industry as an example. From 2016 to 2018, the average annual growth rate of cosmetics in duty-free stores in China was 28% and 7%, respectively. The annual average growth rate of cosmetics in duty-free stores in China, whose price is 30% lower than the general sales price, will reach more than 50%. In the future, the growth of high-end products in the duty-free market will be faster than that in the retail market. The report explains that demand for high-end products (general trading methods) and cross-border e-commerce may be replaced by tax-free channels. Kotra said that as China eases the tax-free policy, China's overseas consumption will flow back to China. It is expected that China's tax-free goods will catch up with the price and diversity of South Korea's tax-free goods and improve the bargaining power of brands. South Korean enterprises should be prepared for this.